Farmland Subsidies and a Bad Trade in the Economic Ecology

In late summer 2016, I looked into the state government’s program, then under development, to purchase farmland and distribute it to small-time farmers (see here and here). Well, Jennifer McDermott reports for the Associated Press that the program is now getting underway, emphasizing that the “entrepreneurial” farmers can buy the property for about one-fifth of what the state pays.

The National Farmers Union knows of no other state that buys farmland to sell to farmers at less than market price. Other states give tax credits and loans to beginning farmers.

Though some critics say this is not the role of state government, Rhode Island sees it as a way to keep young entrepreneurs from moving to other states, where land may be cheaper. It also could attract other farmers to the state, though retaining farmers who already are here is the main goal and the selection process favors Rhode Island farmers.

These points don’t make sense. If other states don’t offer these benefits, farmers won’t find much-cheaper land for quite some distance, creating a pretty high barrier in order to up and leave.

More importantly, allocating resources to this activity — not only in the purchase price, but in the effect of preventing more-efficient usage of the land — implicitly makes somebody else’s activity more difficult. On the hill down which excrement rolls, that “somebody” is more likely to be some other variation of entrepreneur trying to scrape resources together.

To keep the boutique farmer, in other words the state government may ultimately (although invisibly) be dismissing the office-based innovator with some hot technology of the future. Given the geography and soil of the area, such a trade means playing to the Ocean State’s weaknesses, not its strengths.

And farmers aside, which Rhode Islanders does this policy benefit? I’d suggest that the answer is relatively wealthy people who like the aesthetics of having nearby farms and purchasing local produce. Those are aesthetics that I share, but our community (and economy) would be much better served by having it expressed in actual prices for produce. Subsidizing local farms to keep the prices down creates higher prices for something we can’t see.

I think it is wise to remember that most of RI’s “real farmers” moves to the mid-West in the 1850’s and 60’s. That was “not for nothing”, they tired of farming rocks. I live on a former farm, there are complete bridges, walls and roadways built from rocks “farmed” from the fields. With modern transportation and “real” farmland selling around $1,0000 an acre in “farm country”, why do we even think of subsidizing it?

Mike678

What is sad is that you think you are being clever when all you do is expose your ignorance. Deep down you probably recognize this–perhaps one of the reasons you keep changing you nom de plume.

Chip

Something not right here. What other economic activity has the state sell them real property for one-fifth of the market price?